Sainsbury's Reports Annual Profits Of £548m

Sainsbury's is back in the black - reporting annual pre-tax profits of £548m following a £72m loss in the previous financial year.

The chain, which is the second-largest in the UK market, said it achieved the result despite profits from day-to-day trading falling almost 14% amid falling prices and a largely flat picture for sales during the 52 weeks to 12 March.

Sainsbury's reported a 0.9% decline in like-for-like sales - with total retail sales growing by just 0.4%.

It made operating cost savings of £225m over the financial year in an effort to boost its bottom line which was badly hit in the previous 2014/15 year by a writedown of more than £600m on the value of its store estate.

The strategy of price investment alongside a focus on cost control has become widespread in the major supermarket chains which are continuing to tackle a march among shoppers to hard discount stores such as Aldi and Lidl.

Sainsbury's said it was pleased to have maintained its market share over the course of the year.

The FTSE 100 company's chief executive, Mike Coupe, said: "We continue to outperform our main supermarket peers and maintain market share in a competitive, deflationary environment.

"Our core food business performed well, underpinned by our quality investment programme, our simpler pricing strategy and lower regular prices.

"We also saw strong growth in clothing and general merchandise, as well as in our convenience and online channels."

He added: "The market is competitive, and it will remain so for the foreseeable future.

"We believe we have the right strategy in place and are taking the right decisions to achieve our vision to be the most trusted retailer where people love to work and shop.”

The results were announced ahead of new industry figures which showed that Sainsbury's had suffered its first decline in sales since July last year in the 12 weeks to 24 April.

But the Kantar Worldpanel statistics showed it had outperformed its biggest rivals: Tesco, Asda and Morrisons.

As part of its commitment to provide "lower regular prices", Sainsbury's abandoned last month the issue of new money-off vouchers under its Brand Match price pledge which it said it was getting rid of following customer feedback.

The company said its proposed £1.4bn acquisition of Argos-owner Home Retail Group would accelerate its drive for a multi-product, multi-channel shopping experience.

However, its share price fell more than 3% in early trading on the FTSE 100 after it confirmed an 8% fall in its full-year dividend.